- Record quarterly domestic sales seen in value-added products
- BPSL 1 mnt expansion completed, focused on value-added steels
Indian steel major JSW Steel reported marginal drop in crude steel production, while sales volumes rose 6% on the quarter in Q3FY’25. The company expects to achieve 98% of the volume guidance for FY’25 since there was a delay in start up of the JBML facility.
The company’s consolidated capex spending during Q3FY25 was INR 3,087 crore, and the total spend for nine months of FY’25 was INR 10,937 crores.
Highlights
Crude steel production edges down q-o-q: JSW Steel’s standalone crude steel production edged down 1% q-o-q to 5.70 mnt in Q3FY’25 as compared with 5.77 mnt in the last quarter. On y-o-y basis, production remained largely stable in Q3. Despite a temporary maintenance shutdown of one of the blast furnaces in Dolvi, the capacity utilization at the Indian operations stood at 91% in Q3FY’25.
Steel sales up q-o-q: Steel sales witnessed an increase of 6% q-o-q to 5.59 mnt in Q3FY’25 against 5.30 mnt in the previous quarter. Similarly, sales rose 7% y-o-y from 5.20 mnt in Q3FY’24. The share of exports was 8% during the quarter.
Operating EBITDA edges up q-o-q: The company’s operating EBITDA edged up 3% on the quarter to INR 5,579 crores in Q3FY’25 against INR 5,437 crore in Q2FY’25. On y-o-y basis, the same declined by 22% from INR 7,180 crore in the CPLY.
Value-added product mix: The company achieved its highest ever quarterly domestic sales with value-added and special product sales at 3.9 mnt, up 12% y-o-y and comprising 60% of the total sales volume. The company has recorded quarterly sales across multiple segments on y-o-y basis: Institutional sales are up 8%; auto, and renewable are up 39%) while long products showed a 26% increase. Appliance (up 37%) and tinplate (up 51%) did well too. The sales volumes were highest-ever in each category.
Update on key projects
- BPSL expansion of 1 mnt has been fully ramped up, with incremental volumes flowing in, reaching near-rated capacity in Q3. This capacity is focused on value-added and alloy steel products for industries like automotive bearings and railways (Vande Bharat).
- At JBML Vijayanagar, the blast furnace was commissioned in late September, followed by the commissioning of one SMS unit (converter and caster). The second caster began operations in January. The 5 mnt project is progressing well.
- The acquisition of Thiessen Electrical Steel India (NASIC) through a joint venture with JFE Steel has received CCI approval, with closure expected in the coming weeks. Strengthening raw material security is a key focus in Karnataka.
Iron ore & coking coal costs: Coking coal costs fell $34/t better than the previous guidance. However, iron ore costs were higher during the quarter offset by lower losses from lower costs from Odisha mines. The company anticipates coking coal cost to be lower by about $10-15/t during the next quarter, and expects improvements in Q4FY’25 aided by lower coking coal and iron ore prices.
Net sales realizations (NSR): The quarter began with price hikes in October, but unfortunately, steel prices corrected last quarter, and NSR declined by approximately INR 1,800/t q-o-q, which was steeper than the benchmark price reduction. However, the company managed to offset this impact through improved cost management and a favorable product mix.
Outlook
There has been stability in steel prices in January and reduction in steel imports, although they remain elevated for Q3FY’25 and are expected to continue into the upcoming quarter. The company anticipates a further decline in imports due to expected trade measures, which should help support prices.
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